Why Nurses Leave the Bedside; A Bedside RN's perspective
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This Page: The Hospital CEO, part of Topic: Hospitals, Inside Chapter The Health Care Industry and Nurses Within it
See Outside These Pages: Salaries of top execs of HMO's

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This Page Table of Contents: Introduction to topic. About Hospital Top Level Managers and Their Jobs. About Hospital Executives and their Salaries

This Page:

Brief History of the Powers in 
Health Care of the 19th Century, 
their eras of prominence

The 1980s and 1990s, the Industry,
its business, and its nurses

Associated Pages Within This Site:
America's Health Industry
Management Elite-: 

  • The HMOs, MCOs, 

  • & their CEO salaries
  • The Health Care Facility 

  • Conglomerates and their CEO salaries
  • The Consultants: A new 

  • High Tier , their cost
  • Inidividual Hospital & Local 

  • Consortium Hospital CEO
    this is a test it is onlya  a test 
    Nurses salaries eroded 1992 to 2000  [allowing for inflation], and from 2000-2001 there were modest gains.  [See Nursing Salary Stats 1992-2001}  While it is true that RN earnings are "higher than ever", in 2001 they reflected only a 6.54 % real increase from 1992 and this solely as a result of gains made in 2000-2001 while in each of the the 8 years previous nurse's real income actually diminished. Many nurses comment on the diminished aspect of their pay concommitant with a worsening job environment and increased work requirement, and in so doing some mention hospital CEO salaries as exorbitant and somehow diminishing the capacity for their own increases. But a review of Hospital Managers salaries  pertaining to the singular hospital facility or small alliance of local facilities forming a  regional whole seems to remove this tier of CEOs from the gross excesses evident in the 1980s. It second  does not indicate that the CEOs of these entities on average can be considered  grossly overpaid in comparison to similar tier management of  other businesses venues of similar size.    What does emerge in the review of hospital CEO salaries over the last decade is that the austerity measures they have mandated for their nursing resource, including erosion of benefits and real salary diminishment, have not been apportioned to their own ranks; They have been careful to assure a steady increase in income stream via annual increases, bonuses and benefit packages to their own favor at a time when nurses real income and benefits were affected adversely. This has engendered mistrust of nurse for manager and allowed management  to appear both hypocritical and self serving, causing nurses to wonder just how dire the dire economic straits are if such increases are permitted by the hospital steward and sanctioned by its Board.  Because of the great variance in the average hospital CEOs salary from the average nurse salary, and because nurse workload has been perceived as so strenuous and the need for additional nurses perceived as crucial to the nursing staff, and more importantly, the patients they care for, comparisons are made in which calculation of the annual increase, bonus and benefit package of THEIR particular CEO is inevitably calculated and the inevitable conclusion found: It equals an additional nurse for the greater portion of a year. Willingness to adhere personally to the austerity they demanded in form similar to that imposed on nurses would have greatly improved the trust now so clearly lacking in many, [most]  facilities.

    The information on Hospital Managers salaries can only be completely evaluated in light of  the massive changes in Hospital Management occuring since 1964, when it is possible to see a change  in attitude and prominence regarding for profit health care. It is evident that the 1960s was the pivotal  turning point involving  both how hospitals are managed and the societal view of how profits by  them are gained and apportioned, corresponding with the seperation of  health care cost from the individual served  to payment by a  third party. This seperation of health care cost to payment by a third party [insurance] corresponds with the relief of responsability of the individual patients to act as prudent consumers of their own health care and in this environment the  industry was allowed to take on a life of its own. [See The Emergence of For-Profit Health Care] and outside these pages Blame Congress for HMOS [(By Twila Brase and From the Ideas On Liberty, Feb. 2001]

    Hospital Top Level Managers and Their Jobs: 
    Hospital Managers must negotiate the larger Health Care Industry arena, in which much more powerful players are part, notably the Managed Care companies [MCOs] , the Health Maintenance Organizations [HMOS], the huge for profit hospital and health care facility chains, the pharmaceutical industry, and a newly emergent upper tier to hospital management again exerting its influence: the consultants. It was the consultants who came in to the not for profit hospitals and realligned their position in the 1970s,  creating in the doing hospital management as we now understand it. As the managed care companies forced pressure on the industry in the 1990s, the consultant niche gained renewed prominence. Called in by the hospital managers to help the managers to do their job, the consultants command exorbitant fees and lavish expense accounts; their function and fees apportions them to the tier of management elite.  Their impact on the nursing environment in their role as  consultants, interim management, and industry pundits in the 1990s up to the present involves diminishment of nurse voice in the hospital hegemony [ terribly weak to begin with], the worsening of nurse work load concurrent with real salary erosion and benefit loss. Consultants, and particularly the Hunter Group, are so pivotal to hospital business practice that they  are provided with their own page herein [See The New Elite: The Consultants

    The Salaries of Hospital Executives

    Much of nurses sentiment about CEOs being overpaid is not borne out by the data on the average CEOs salary as reported below. These wages do not reflect the CEO salaries/benefits of the largest hospital conglomerates, which are wildly different from the figures below [ and so fuel the antipathy of nurses towards their management at those institutions while creating the innacurate reference of ALL CEOs being overpaid]. 
    What IS remarkable  in the  for profit health care era,  is the universal willingness of hospital CEOs and top level executives to protect their own wage base. Of interest as well, is the common utilization of  the remarkably expensive consulting firms hired by hospital executives to help them determine how to do their jobs. While there has been gross profiteering by both CEOs of the largest Hospital conglomerates [See Tenet] and enormous salaries paid to the CEOs of managed care entities, the average salary of the independently standing Hospital CEO is far more modest [including in its statistical base the small community and also rural hospitals]. Still, the willingness to assure their own increasing salaries, while fighting against increases for the primary labor pool of their businesses [RNs] has been historically attested by the irresponsible suppresion of those persons salaries at the same time that management  created what nurses call hostile work environments-both of which contribute to the shortage, and neither of which, erradicated, is alone enough to reverse the longstanding nursing shortage of which the current Crisis shortage is just a part, and in which the alienating power structure and wage base differential has played no small part. For full context of the information below, refer as well to  Nursing Salary Stats 1992-2001. 

     "I always say, 'God's the CEO; I'm just the director,' " said Sister Angela Murdaugh, MSN, RN, a  certified nurse-midwife and director of the Holy Family Birth Center in Weslaco, Texas. http://www.nurseweek.com/news/features/02-01/sisterhood.asp

    "Nurses' salary increases trumped their bosses' gains in 2001, climbing 8.1 percent  compared to CEOs' 7.5 percent, according to an annual national survey by the Hay Group, a human  resources consulting firm in Philadelphia. But pricey executive perks jumped, too, handing the chieftains the edge. In all, hospital CEOs' total cash compensation rose 13.5 percent from a year  earlier. "  Hospitals healthy in their CEO pay anyway"  by Susan L. Thomas. From September 20, 2002 print edition . East Bay Business Times. "

    "....The median CEO base salary for 2002 is $237,000, but total cash averages paid to CEOs -- base plus incentives -- increased 13.4%. All  data were gathered and analyzed by the Hay Group, in cooperation with the America Society for Healthcare Human Resources  Administration. For more information go to http://www.hhnmag.com" Survey: Nurses lead hospital salary increases September 16, 2002. From the American Hospital Association webpages at AHANews.com. 

    "Executive Bonuses 2002: A sizeable share of companies that Towers Perrin surveyed also are reining in salary increases this year. Technology, entertainment, and financial-service businesses are among the hardest hit, while health care and pharmaceuticals report little or no change in salary increases, compared to 2001." 
    Executive bonuses: Health care takes care of its own [MANAGED CARE  February 2002. Managed Care describes itself as  "A guide for managed care executives and physicians..." ] 

    "The Business Times list details the CEOs' basic cash salary, and does not, in the majority of cases, reflect the value of other executive benefits, such as health, life and disability insurance, pension plans, club memberships, and company cars. The value of those benefits can be substantial. Healthcare Compensation Strategies' Web site said health care executives' benefit packages typically cost from 35 percent to 42 percent of salary. "
    Pittsburgh Business Times , Sept 8 2000 Edition. By Jane-Ellen Robinet


    The history of power in health care through the 20th century involves several eras, and  is nicely explained by Rene Jahiel in an article published in CMJ.  Identified in the power group are "physicians (from the 1900s on), hospitals and not-for-profit insurance (from the 1930s on), governmental regulators (from the 1960s on), and, lastly, for-profit managed care enterprises (from the 1980s on). In the 1980s and 1990s, as health services developed into a major industry, two contending business groups (health plans and payers) took commanding positions over consumers and employees. Market-oriented, for-profit managed care organizations came to play a dominant role. During that period, access to, and, by some measures, quality of care has declined. The rise in health care costs has been interrupted, but it is not clear how long this will last....."

    The For Profit era of health care gained impetus with 1964s federal legislation involved in "the Great Society". The birth of Medicare and Medicaid gave impetus and justification of for-profit business in health care as an emergent ideology. Jahiel explains that  this lead various "types of businesses (pharmaceutical and medical device industries, laboratories, for-profit insurance, and hospital-associated business) toward higher priority in the health care system [and ] provided boosts to many of these industries and supported the growth of relatively new industries in nursing homes and home health care which flourished in the 1970s. As the cost of medical care continued rising in the 1970s and 1980s, these various industries showed increased profits, and they were joined by others, including the electronic information industry (for computerized billings and other information needs), pharmacological companies specialized in biotechnology, for-profit hospital chains, and various companies formed to exploit new technical devices....In the late 1970s, a type of industry that was to become a major player in the 1990s entered the health field. It was hospital management corporations who were initially called in as consultants to help financially distressed hospitals. These corporations came in with business methods to decrease costs, including hospital mergers of services. Others bought hospitals, rehabilitated them, and some of them grew into large hospital chains. A large managed care industry combining management of physicians and hospitals developed in the 1980s. It grew further in the 1990s, possibly in response to the alternative that the Clinton national health proposal might provide, to the point where it now dominates the health care market in most areas. This industry interacts with insurance companies which provide underwriting and existing patients and physician panels; with large employers as payers; and with physicians, hospitals and other entities as providers of services and goods. These four groups  the MCOs [managed care organizations] , the insurance companies, the payers, and the providers ,  constitute the main current structure of personal health care in the USA...
    "Since the 1980s, the for-profit sector has gained dominance of the private sector. Many MCOs and the associated insurance industries have made enormous profits which have gone to their stockholders through the rise in the value of their shares in the stock market, and to their chief executive officers (CEOs) and other high executives through their stock options and high salaries. Many CEOs have incomes over $1 million a year and, in at least one instance, over $1 billion (inclusive of stock options)."
    Health Care System of the United States and Its Priorities: History and Countries. By Rene I. Jahiel
    Department of Community Medicine, University of Connecticut Health Center, Farmington, Conn  printed in Croatian Medical Journal September 1998 (Volume 39, Number 3)" 



    Health Partners :
    The HealthPartners and Group Health Joint Board of Directors "is made up of 15 members. Thirteen are HealthPartners members elected by the membership; two are physicians appointed from the HealthPartners provider network."  NONE is a Nurse. ["HealthPartners is a family of nonprofit Minnesota health care organizations focused on improving the health of its members, its patients and the community. HealthPartners is consumer-governed. HealthPartners and its related organizations provide health care services, insurance and HMO coverage to nearly 660,000 members. More than 9,200 employees staff the various HealthPartners organizations."  From Health Partners Webpage http://www.healthpartners.com/Menu/0,1598,142,00.html]

    Healthsouth.com is the webpage for HEALTHSOUTH where they are self described as " the nation's largest healthcare services provider, with  approximately 1,700 facilities in all 50 states and abroad. Our vast network of  highly skilled physicians and therapists and the latest equipment and technology  guarantees that all patients have easy access to high quality healthcare." Their fascilities are both inpatient and outpatient entities.
    Personal Finance :  Scrushy Reaps $17.5 Million From Healthcare Realty Trust  By Jonas Max Ferris  Special to TheStreet.com,  04/15/2003

    Richard M. Scrushy made the lion's share of his fortune at HealthSouth, the collapsed health care company where  he had one of the industry's most liberal pay packages.

     But his riches, which reportedly included several mansions, 20 boats, 40 cars, planes and other valuable objects,   didn't come only from HealthSouth. The founder and chief executive of HealthSouth also netted millions of dollars from other publicly traded and private companies. Among them was Capstone Capital, a real estate investment trust he founded that was acquired by Healthcare Realty Trust ....Meanwhile, HealthSouth's stock now trades for  pennies, and Scrushy and several former  HealthSouth executives are under investigation for a litany of allegedly fraudulent practices. "
    On March 19 2003,, The  Securities and Exchange Commission took litigation action  against  HealthSouth Corp., CEO Richard Scrushy   With $1.4 Billion Accounting Fraud

    "Forum Health was formed in July of 1997  bringing together the resources of the areaís  leading hospitals, medical centers, ambulatory
     campuses, home care agencies and other clinical services.
    With nearly 5,000 employees providing medical services at nearly 30 locations throughout Mahoning, Trumbull and Columbiana counties,
    Forum Health is the third largest integrated health care delivery system in northeast Ohio.....Nursing at Forum Health offers an environment that promotes the spirit of participative management in the decision making process. Forum Health values the dedication and commitment of our nursing staff by offering competitive salaries, excellent benefits and flexible  scheduling. " Forumhealth.org

    "Last year, about 770 nurses in Youngstown, Ohio, went on strike for 78  days against Forum Health, a system that includes Northside Medical Center and Tod Children's Hospital. A key issue in that strike was mandatory overtime.
    In June last year, six hospitals in Minneapolis-St. Paul employing about  7,700 nurses narrowly avoided the nation's largest-ever nursing strike by  agreeing to provide 20 percent pay raises. " Thursday, June 27, 2002 . By Tim Bonfield Hospital braces for nurses strikeThe Cincinnati Enquirer